Landowners willing to sign anything now?

Some landowners in the area are now nervous because they didn't sign a lease or signed one and were not paid.  Some are talking about signing any lease, just to get the bonus money and are giving up on the landowner friendly language.  Land groups have not been abled to acheive good lease language plus the large bonus and royalties that were seen in other shale plays because the oil and gas companies aren't willing to sign true gross leases with landowner friendly language and the market isn't in their favor.  Now the potential lessee's are stating that some townships in Belmont County are not wanted, which will make the language, bonus and royalty even more unfavorable to the lessor.  Brokers are stating that if you want leased, here's the lease and the terms are not negotiable. 

 

With Natural Gas prices being so low (and an election year), it may be best to hold out for a few years until prices rise, infrastructure gets built and the earthquake and coal issues are resolved.....rather than sign the standard o&g lease under their terms.  For this to work, the landowners must stick together and not let the o&g companies split them apart.  If you're in a group fighting for lease language on your terms, stay with them and see what you can do to help the group. 

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Replies to This Discussion

Permalink Reply by Dan on April 13, 2012 at 2:11am

Philip,

Did the lease offer a dollar amount for each barrel injected or just the $1000.  I have heard that the injection well is metered and that landowners have been offered a price / barrel going into the well.  Isn't the foot print small for this type of well not considering the transfer area?  The traffic would be never ending,  it would be insane to lease for only $1000.  

Permalink Reply by Philip Brutz on April 13, 2012 at 3:05am

Just $1000 a year total.  They also could convert my land into gas storage anytime that they wanted. This was a CHK boiler plate lease from last May.  Back then they were offering $1500 an acre 12.5% net for my 82 acres.  Which sounded pretty good until I read the lease.  I am guessing that many people signed these leases with out realizing what they were signing away.  I am very happy that I joined the KWG&D landowners group.

Permalink Reply by R. East on April 11, 2012 at 6:08am

deron - I agree that one shouldn't sign without a good lease, however, It appears that I am not in the same financial situation as you are. 5,300 and 20% is a heck of a lot of money too me. In my case, the bonus alone would be a tad over one million dollars! There is no way I would risk losing that amount of money!

I am  not sure what the law is in OH regarding set back limits, however, I do know in PA that they can drill with 330' feet of a boundry line and even closer at shallow depths. I have seen where "holdouts" have had wells drilled along their property lines and have lost out on the bonus money and royalties. The did in fact, as you mentioned above, come back around and fill in the last remaining acres, however, they actually offered less bonus because they had the ability to work around you.

Good luck..I hope the hold out tactic works for you..

Permalink Reply by Billy Park Whyde on April 11, 2012 at 6:36am

Ohio is currently at 400' for a vertical well to the depth of a Utica from property lines. A horizontal is at 500' I believe. However greedy a O&G may be I would think that they would avoid a encroachment by voluntarily extending that boundary. Errors could be way to costly.

Permalink Reply by Finnbear on April 11, 2012 at 7:05am

Well Spacing per OAC

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Permalink Reply by Billy Park Whyde on April 11, 2012 at 7:22am

Thank ya Finnbear

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